IntegratingTheThreads6x - Case Study Professors given tour...

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2/4/2007 Industrial Data and Systems Analysis 1 Integrating the Threads Peter L. Jackson Professor School of O.R. and I.E. 2/4/2007 Industrial Data and Systems Analysis 2 Case Study Professors given tour of large automotive parts processing plant (PP) Shown charts of production history High variability: weeks of overtime follow weeks of relative inactivity Supplier Parts Processing Plant (PP) Distribution Center (DC) Dealer Repair Shop 2/4/2007 Industrial Data and Systems Analysis 3 Data Analysis We suspect the problem is lot sizes The so-called “bullwhip effect” Collect data (’000s of part numbers) By part number, sales rate from DC to dealers By part number, DC standard order quantity By part number, rack size (minimum supplier ship quantity) By part number, standard production order quantity By part number, by workcenter, production hours per piece Import to MS Access 2/4/2007 Industrial Data and Systems Analysis 4 Data Analysis (cont’d) Using SQL (wish we had a student to do all this): Simulate randomized DC sales Derive DC order stream on PP Round DC order stream to next largest rack quantity Derive PP production orders Aggregate by workcenter (convert to production hours) Display results as graph Conclusion: “Oh, we do it to ourselves!” Production order quantities are major source of variability “We have seen the enemy and he is us.” Pogo 2/4/2007 Industrial Data and Systems Analysis 5 Source of Production Variability Simulated Pipeline Ordering Activity 0 20 40 60 80 100 120 0 1 02 03 04 05 06 07 0 Simulated Day Production Hours Ordered DC Sales DC Orders DC Orders by Rack Production Orders 2/4/2007 Industrial Data and Systems Analysis 6 Consequences of Large Lot Sizes Cost reduction due to batching Avoidance of setup time and cost (This is a first order effect) Cost increase due to batching Hidden costs Ex. Overtime to cope with unpredictable production loads (This is a second order effect) “Economics is the science of studying secondary and tertiary effects” Ludwig von Mises First order effects are usually obvious to everyone Economist should look beyond the obvious
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2/4/2007 Industrial Data and Systems Analysis 7 Strategy to Reduce Production Variability 2/4/2007 Industrial Data and Systems Analysis 8 The M.F.D. THRUPUT Game 2/4/2007 Industrial Data and Systems Analysis 9 The Throughput Game Organization: General Motors Metal Fabricating Division (GM MFD) Goal: To improve substantially the productivity of our people and our assets 2/4/2007 Industrial Data and Systems Analysis 10 How Can We Achieve This?
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IntegratingTheThreads6x - Case Study Professors given tour...

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